Why a heat wave costs more than you might think

One year ago today, simultaneous global heat waves ended up impacting not only the U.S. but the entire world. Every single continent in the Northern hemisphere broke temperature records. It was hot.

These severe weather patterns have been, and continue to be, linked to changes in our global climate. Climate change has brought with it - along with many other things - an increase in the frequency and intensity of heat waves. These heat waves have devastating effects on agriculture, health, storm weather patterns, and the like. They also mean higher electricity demand—and cost. Specifically, cost to you.

This raised demand for electricity affects the price of electricity in one obvious way: your bills rise because you’re using more of it to cool your home or apartment. But an increase in demand also has an effect on the production and supply cost of electricity. An increase in peak demand times for electricity - sustained periods of time when demand is at a significantly higher than average supply level - can cost power companies millions. All in all, continued severe heat waves are in no way good news for your spending budget - or the U.S. power grid.

The impact of climate change on your daily life is difficult for most of us to comprehend. Electricity prices differ state-by-state, most of our power bills are vague or hard to understand, and the energy market is complex. To help you better understand the potential tangible impact of severe hot weather on your power costs, we decided to take a closer look at how last summer impacted our users.

Our members all across the country experienced above-average temperatures last summer, but we chose to hone-in on those who really suffered through the worst of it - southern Californians, Arizonans, and Nevadans. We looked at our users’ average household electricity usage that month in major Southwest cities, calculated the power bill cost for these average households using EIA’s Monthly Average Residential Price of Electricity data, and compared the final average costs with the same data from June 2016. Here is what we found:

June Electric Bill Costs

Phoenix residents’ average June electricity costs nearly doubled due to severe heat in 2017. According to our member data, the average household in Phoenix spent over $50 more on electricity costs in June 2017 than June 2016, with only about a 1% increase in average per kWh electricity price. Phoenix alone experienced the third hottest month ever on record last June.

Phoenix, AZ

June 2016 Avg. Usage Cost: 963 kWh x 12.54 cents/kWh = $121

June 2017 Avg. Usage Cost: 1377 kWh x 12.65 cents/kWh = $174

Approx. 43% increase in usage

Los Angeles residents’ extra costs followed just behind Phoenix, with additional use in 2017 equaling about 42 percent. California residents experienced the largest increase in average price per kilowatt hour at a 7% increase. However, total usage still resulted in a 42% increase, with extra monthly cost totally about $25.

Los Angeles, CA

June 2016 Avg. Usage Cost: 264 x 18.11 cents/kWh = $48

June 2017 Avg Usage Cost: 374 kWh x 19.39 cents/kWh = $73

Approx. 42% increase in usage

Tuscon, AZ and Reno, NV households experienced big electricity price hikes but still would have spent over fifteen percent more on electricity even if prices had not changed.

Reno, NV

June 2016 Avg. Usage Cost: 512 kWh x 11.40 cents/kWh = $58

June 2017 Avg. Usage Cost: 643 kWh x 11.64 cents/kWh = $75

Approx. 28% increase in usage

Tucson, AZ

June 2016 Avg. Usage Cost: 932 kWh x 12.54 cents/kWh = $117

June 2017 Avg Usage Cost: 1,078 kWh x 12.65 cents/kWh = $136

Approx. 17% increase in usage

According to the EPA, if the nation’s climate warms by 1.8°F, the demand for energy used for cooling is expected to increase by about 5-20 percent, while the demand for energy used for heating is only expected to decrease by about 3-15 percent.

The national weather service also predicts that the majority of the U.S. will once again experience above normal temperatures in June, July, and August 2018. Once again homeowners and renters will find themselves paying more on their monthly electric bills, but there is hope. Supporting renewable energy and paying closer attention to your power bills has the potential shave significant money off of your electric expenses every month. Renewable energy continues to drive down costs, and smart home technology can ensure that you are using your electricity efficiently without putting additional stress on the power grid or your budget.